For years, I was stuck in a cycle of undercharging. I had no clue how to price my services, and the fear of asking for too much kept me trapped in a cycle of dirt-cheap fees. Like many freelancers, consultants, and others, I struggled with the question: “How much should I charge?”
There was a constant battle between my desire to be fairly compensated and my nagging fear that charging my true value would scare away clients. I was stuck.
If you‘ve ever felt this way, you’re not alone. Determining how much to charge as a consultant is often a complex and emotional journey.
The good news? There are proven methods and factors to consider that can help you set your rates and escape the cycle of undercharging. In this article, I’ll explore the psychology of consultant fees, discuss different pricing models, and highlight the key considerations for calculating your worth.
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Ask any business person worth their salt and they will tell you, “The first sale is to yourself.” No, you don’t have to buy your own product or service, but you do have to buy into your ability to deliver it.
If you don‘t believe that you have the qualifications, skills, and talents to live up to the promises you’re making, clients will smell your insecurity a mile away. Confidence is essential. It may take some time to build up that confidence, but be wary of undervaluing your services as you build that belief in yourself.
Why is that the case? Well:
If you need to build your skill and confidence as a new consultant or even a small business, consider offering a “Beta Program” for people you already know, making it perfectly clear that you are in the process of learning and you will be charging more once you’ve got a few clients under your belt.
If there is a cause you support, you could even consider donating your time to a nonprofit or charging a nominal fee in order to build up your portfolio.
Let’s say that you’ve worked through all your insecurities about charging for your services and are confident in your ability to deliver results. You're good at what you do and know that you bring value to your clients. The question becomes, “How do I figure out what my service is worth?”
People have been led to believe that goods and services have an inherent value—but they don't. Pricing comes down to two parties agreeing to a specific number.
That number can be as high or as low as those parties accept. If you're a business consultant who wants to make $10,000 a day and you find a client who is willing to pay $10,000 a day, you’ve just determined the “value” of your service.
In reality, the more important questions in regards to pricing are, “How much are people willing to pay me for my time?” and, “How much am I willing to accept for my time?”
This can be a delicate balance between making sure your needs are met and not pricing yourself out of the sale. You may want to make $100 an hour, but your potential client is only willing to pay $10. Do you undervalue yourself to get the job or walk away and find someone who is willing to part with $100 to see their desired outcome?
There is one more factor to consider that makes this a bit easier. It’s called the “Market Rate” and refers to the range of pay that the average customer or client will pay for your service. It doesn’t dictate what you can charge but provides guidelines as to what you’re most likely to get.
Keep in mind, if the average consulting fees are around $100 per hour, your experience and track record will need to be taken into account. If you are a brand-new consultant, you may be charging closer to $50 per hour.
With 20 years of experience under your belt, you may be charging $150 or even $200 per hour. One other thing to note: While you may be a new “consultant,” if you’ve spent the last 30 years in this specific industry as an employee, you have plenty of experience. Don't shortchange yourself.
Let’s begin with one of the simplest ways to charge — hourly. We spoke earlier about how it can be difficult to charge $100 if you’ve never made more than $50 per hour. Consider this, what else was included with your $50 an hour paycheck? You likely received:
Your employer footed the bill for all of that. As an entrepreneur and consultant, you’ll be paying for your own benefits, buying your own computer and workspace, and no one will be paying you to go on vacation. You’ll also spend at least half your time (in the beginning) tracking down new clients rather than working billable hours.
It makes sense that you should charge more, but why should your client be willing to pay more?
If they were to hire you or someone else to provide the service you are about to provide, they’d be paying for all of those things out of their own pocket (not to mention unemployment insurance). Paying you more to not be an employee actually saves them money in the long run.
With all of this in mind, how do you calculate a good rate for yourself?
Consider what you were making at your last job. If you know the hourly rate, you are ahead of the game. If you don’t, use this equation:
Example: $100,000 per year/ 50 = 2,000/ 40 = $50 per hour
While hourly rates are straightforward, they might not be the best fit for everyone. In my case as a freelance writer, I've developed efficient project management and research processes, and invested in tools that significantly reduce my turnaround time.
Charging by the hour would discount my years of experience and the investments I've made to improve my productivity.
No matter what you do, you’re bound to get better at it the more you do it. You could raise your hourly fee to compensate, but clients may have a hard time swallowing the higher hourly rate.
This is why I've found that charging by project works best for me. It allows me to focus on delivering high-quality work, without feeling pressured to stretch out my hours. My clients appreciate the clarity and predictability of project-based pricing, and I feel it better reflects the value I bring to each assignment.
How do you determine the project rate? You know approximately how much time it will take you and how much you should make. This can become your project rate and make quoting much easier. Here’s a formula to help you figure this out:
(Estimated hours of work + a 20% cushion for the unexpected) X Hourly Rate = Project Cost
This allows you to make what you deserve and gives your client the security of knowing they won’t be hit with a brutal invoice.
Rather than say “how to charge based on ROI,” we need to discuss “whether you should charge based on ROI.”
For a new consultant, the idea of getting paid a percentage of what you bring in can sound wonderful. It also sounds like something that a business owner should jump at. After all, if you don’t do a good job, they don’t pay you very much. Sounds perfect, right?
Wrong. If a business knows that you are going to deliver results and they are going to increase their revenue by around $100k, would they rather give you a hefty percentage of that revenue or find someone who will deliver the same results for a (significantly lower) fixed rate?
Obviously, they’re going to look for the best value for them. If you find a business willing to agree to these terms, they either don’t have the money to pay you upfront or lack faith in their follow-through to implement the steps you advise them to take. Either way, they aren’t the type of client you want to work with.
If you have a history with the client and full trust in them, know how to track the ROI, know that they will implement your solutions, and believe they will pay you in a timely fashion, charging based on ROI may have a lucrative payoff.
Value-based pricing focuses on the value you bring to your clients. Instead of charging for your time, you charge for the outcomes and results you achieve. It requires a deeper understanding of your clients' needs, challenges, and desired outcomes.
Dan Tabaran, marketing consultant at influencer marketing platform Influencity, explains the advantages of this model:
“It ties the fee directly to the outcomes I help clients achieve. This makes sense because clients are usually more willing to pay when they see real results. It also reflects the importance of my advice in solving their problems or improving their business. This approach focuses on quality and the impact of my work, not just the time spent.”
How do you implement it?
Start by identifying the specific problems your clients are facing and the value they place on solving those problems. Consider the impact your services will have on their business, such as increased revenue, cost savings, improved efficiency, or enhanced customer satisfaction.
For those looking to build a career in consulting, package-based pricing can be an excellent way to differentiate your services and make them more appealing to potential clients.
Package-based pricing involves bundling your services into predefined packages, each with a set price. These offer clarity and simplicity for both you and your clients.
It's great for projects with defined scopes and deliverables, as it eliminates the need for hourly tracking and provides clients with a clear understanding of the cost upfront.
In my freelance writing business, I use package-based pricing to attract new clients and provide clear value propositions.
For example, I might offer a “Content Starter Pack” that includes a set number of blog posts and social media posts. This allows clients to understand what they're getting and compare options. I sometimes include a slight discount for more comprehensive packages to encourage clients to commit more upfront.
Unlike retainers, which provide ongoing access to your services, packages are typically project-based or have a defined scope. Packages help clients who have specific, short-term needs or want to try your services before committing to a longer-term arrangement.
Pro tip: Mia Čomić, Founder and Content Strategist Bublgam, a marketing services company, suggests tailoring packages unique to each client.
“Focus on each discovery call you lead and take good notes of the deals you didn’t close. Here’s how you can do this:
Retainer pricing involves a client paying a recurring fee, often monthly, in exchange for a set amount of your time or services. This model is great for building long-term relationships and providing ongoing support to clients.
Retainers offer stability for you and your client.
Ben Vaughan, vice president of analytics services at Brewster Consulting Group, highlights the advantages of retainer pricing from both the consultant and client perspectives:
“We typically use a monthly flat fee with our clients with no end date to the relationship. We do this because it enables us to have a consistent cash flow, gives the client a consistent cost that they can budget for, and — if you price it correctly — becomes something they don't even consider discontinuing with over time,” Vaughan says.
Percentage-based pricing involves charging a percentage of the client‘s revenue, sales, or spending on a particular project. This model is often used in marketing, sales, and financial consulting, where the consultant’s efforts directly impact the client's bottom line.
Steve Fanous at Teeterme, Toronto's lawyer directory, provides an excellent example of how this model can work.
“The pricing model I use is to charge a percentage-based management fee that is based off of the client’s monthly spend. So, for example, if the client spends $10,000 per month, my fee is 10% which is $1000 for that client,” Fanous says.
Fanous explains the benefits of this approach:
“I found this model to be very successful as I typically start with a starter budget, show results & grow the budget strategically with the client. This in turn increases my monthly dollar value in fees. It's a performance-based model,” Fanous says.
Fanous also emphasizes the positive aspect of this pricing model: This approach reframes the fee conversation and positions it as an investment in the client‘s growth rather than an expense. If you align your interests with the client’s success, you'll create a powerful incentive for both parties.
Now that we‘ve covered various pricing strategies, it’s also important to consider how you'll present these to clients. Our free consulting templates can be invaluable here. The consulting kit includes a Consulting Plan Presentation Template that can help you communicate your pricing and value proposition clearly and professionally.
As you learn how to become a consultant, communication can make all the difference in securing clients and justifying your fees. Here are four essential tips to help you confidently navigate pricing conversations:
Want to build trust fast? Be open about your pricing. Put your rates right on your website and break down the costs clearly. This shows clients you're confident in your value and helps them know exactly what to expect.
Taylor Scher, an SEO Consultant, breaks down his pricing packages in detail on his website.
Pro tip: Take transparency a step further by conducting audits.
"All of my engagements always start with an audit (before the proposal was signed) to help my clients understand the areas I‘ll be able to help them with. So instead of pitching myself, I’m pitching a desired goal we can reach. Only then, does pricing not really become a factor,” Scher says.
When you lay out the specific areas where you'll make an impact, suddenly your price tag makes a whole lot more sense.
Reframe the fee conversation, and position it as an investment in the client‘s growth rather than an expense. If you align your interests with the client’s success, you'll create a powerful incentive for both parties.
Steve adds, “Typically, pricing is the part everybody hates. However, I turn it into a positive by explaining this pricing model is performance-based. My fees will only go up if their online business and monthly spend is growing. My clients don't look at it so much as an expense. It's more of an investment.”
Highlight how your expertise can lead to increased revenue, improved efficiency, or other measurable benefits that directly impact the client‘s bottom line. Use case studies, testimonials, and data to demonstrate the value you’ve provided to other clients.
This way, you alleviate concerns about cost and position yourself as a partner in their growth.
Strike a balance between clarity and understanding when discussing pricing with potential clients. Being upfront about your rates shows professionalism and saves time for both parties, but it‘s equally important to be receptive to the client’s perspective and concerns.
Will Yang, Head of Growth and Marketing at grant management solution Instrumentl, offers valuable advice on this approach:
"I recommend starting the conversation by clearly outlining your rates and any additional fees. For example, ‘My hourly rate is $X, and I charge a flat fee of $Y for travel expenses.’ Then pause and ask if they have any initial reactions or concerns.
Listen closely to understand their perspective. Make sure to welcome any questions they may have. Pricing discussions go smoother when you convey respect for the client's budget and genuinely work to provide win-win solutions."
This strategy combines directness with empathy. You create an open dialogue by clearly stating your rates. Your client will appreciate your willingness to work together and you can address any budget concerns right away.
Comparing your fees with alternatives can be a great way to contextualize your pricing with potential clients. It lets clients know what you offer in relation to other options they might consider.
Ben explains his strategy, “We like to put things in perspective of what the alternative to the client is. For example, if we're proposing a fractional BI Development resource, we may quote them what the salary and benefits are in their local market and compare that to what we're proposing.”
This method accomplishes several things:
You‘re not just saying a number. You’re showing the value proposition of your services.
Want to learn more about selling your consulting services? Inbound sales methods can help you foster a relationship and become the obvious choice for prospects when they’re ready to commit. You can learn more about inbound sales in our HubSpot Academy course.
As I reflect on my journey in consulting, I'm struck by how much my approach to pricing has evolved. When I started, I was terrified of charging too much. Now, I realize that undervaluing my services was the real danger.
The biggest lesson I‘ve learned is that pricing isn’t just about numbers — it's about confidence. When I believe in the value I provide, it becomes much easier to communicate that value to clients.
Your pricing reflects not just your skills, but your experience, your unique perspective, and the results you deliver. Don‘t be afraid to charge what you’re worth. The right clients always appreciate the value you bring to the table.